It is stories JUST like this one that explain why a good friend of mine had to file for bankruptcy. Knowing his persona, i see virtually identical character traits common to gambling addicts.

No one will burst your bubble Cat, except yourself.I wish you all the best in your investing, but i have to say that your incredible amount of risk taking as evidenced by your trading actions could seriously jeopardize your expected early retirement. I'm hoping you don't have family banking on your presumed long term success.The fact that traders with this attitude don't see this in themselves, creates the ridiculous swing markets that we see.

Panic traders and crystal ballers.And every one of them THINKS they know how it all works.

_________________________"Those who preach the myths of audio are ignorant of truth."

It's not risky, IF you sell high and buy low. It's always those that panic and sell when the market goes down that loose. So, far, I've been able to keep my 401k at it's highest level. If the market plunges while it's in risk and not cash, the smart thing to do is wait it out, like I did in 2008/09. Many people I know paniced at the lows and sold out, including my retired sister, who lost 1/2 of her money. I warned her not to, but she did it anyway. Bought an annuity with almost 100% of her money, which at the time was 1/2 of what she had.

So. Yes, you can loose good money, if you don't know what you're doing. But to make money (even in a 401k), timing the market is the best way to do it when you don't have a lot of time. I subscribe to a site called Stocktiming.com that helps with the overall market timing situation, and I study charts.

It's not the small time traders that cause the market swings, nearly as much as the institutional traders such as mutual funds and hedge funds that trade in enormous quantities. But there is an upside to this for the opportunistic trader and that is market volatility makes him rich. You just trade the huge swings as best as you can.

If I bought SPY (fund that mimics S&P 500 index) in November 1998 and held onto it. Today, it'd have the exact same dollar value as it did in 1998. You can't say that buy and hold works.

One more thing. I have to make this work for me, because it's what I plan on doing for a living after I retire. 8 years of playing in a ROTH IRA has taught me some valuable lessons about how dangerous trading is.

Unless you buy low and the market keeps going lower, as has happened to my brother on occasion.

Quote:

You can't say that buy and hold works.

No, but Warren Buffet can. Have you ever read anything by Soros, the guy who bet against the pound and won?

He was a seriously mathematical guy who did significant risk modeling to backup his trading. His stuff is not easy to follow.

You may well end up being good at day trading, but short term moves are driven by market emotion and are not reliable so you are engaging in a fairly high risk activity. Hopefully you are aware of the risks and are taking steps to manage them.

_________________________
Fred

-------Blujays1: Spending Fred's money one bottle at a time, no two... Oh crap!

Good article. I've read books about the emotions of trading and experienced the emotion of fear and greed many times over, so I know all about that aspect. But to have the ability to make decisions based on probable outcome, at least in my experience has been more of a negative one. Doing thinks Buffet's way can take years to make any money. (Also, he buys large enough portions that gives him rights to make changes in the company itself. Not something your average trader can do.)

Out of all the different things I've tried, trading-wise, there is one thing that works for me, so I should stick with what works. I make more money, just by buying momo (momentum). JVA was an example stock a few months ago. It shot up about 500% in just over a month. I got into the tail end of it and made a quick 50%. These don't happen every day, but if your patient and observant, it can work. Just be quick on the sell button if something should go wrong. Buying, then watching something tank, hoping it'll go back up is another no-no. Hope will not make you money. I held JVA for about 4 days, saw the weakness, then sold out just before it tanked. Same with the over-all market, you can't see suprise events coming, but you can see weakness and strength and patterns.

After more thinking on this subject, I thought I'd comment further. Sorry guys, but I just had to, to let you know that there is some method to the madness.

What I did with my 401k was,

1) I noticed market weakness, before the last big drop we had, 2 or 3 months ago, so I was being conservative and careful and transfered my money from risk into cash. Then we had the big down move. I didn't lose any money.

2) Once, while the market was at it's lows, I moved from cash into risk, hoping to ride it back up.

3) It went down a bit, then back up, where the market started to look weak again, so I moved it back to cash.

4) Now the market is down at it's lowest point during this latest market mini-crash, and we had a day of positive market movement. It could go either way from here. Probably small up, and then a possible big down. I moved money back to risk in order not to miss any possible upside, incase of major move.

The end result, either I make lots of extra money on the upward move, either short term, or long term... or, I didn't lose as much as everyone else did in the next big fall... either way, I win.

I hate mutual funds. I got an 85 day buying restriction on the one I just sold, because I only held it about 4 days. lol.

Back in the day when I didn't have a lot in it, I'd trade in and out about every other day, when I thought it'd do me some good. But when more money is involved, they start crying and throwing restriction letters around.

Oh well. there are a few more funds available, but only 2 or 3 that gain/lose the most in market movements. I can roll the 401k over to an IRA on April 7, 2012. Woopie. Trading individual stocks is mostly a no-no, but some well traded ETF's should work out about right. (I can buy and sell them all day long without restriction, if I should feel the need to do so. Oh, the market is going up, buy SPY. Oh no, the market is going down, sell SPY and buy TVIX. Oh no...).